Everything You Need To Know About Estimated Chargeable Income in Singapore - Updated 2024
As a business owner in Singapore, it's important for you to comply with the many regulations that the Internal Revenue Authority of Singapore (IRAS) has in place for Singapore-registered companies. These compliance items may come in fees, documents, or a combination. One such item is called the ECI or estimated chargeable income. In accounting terms, filing of ECI statement is referred to as ECI. And in Singapore, filing of ECI dis required.
And in this article, we'll talk more about the Singapore ECI or estimated chargeable income and how it affects you as a business owner.
What Is Estimated Chargeable Income (ECI)?
Estimated Chargeable Income or ECI is your company's estimated taxable profit, which is net of taxable expenses, for a particular Year of Assessment (YA).
Companies need to file their Estimated Chargeable Income within three months after the end of their financial year unless they meet specific criteria that qualifies them for a waiver.
If your company owes taxes, the Inland Revenue Authority of Singapore (IRAS) sends you a Notice of Assessment (NOA). The company is legally required to pay their taxes within one month from the date of the NOA, unless there’s an agreement to pay the taxes in installments.
Understanding the Concept of Estimated Chargeable Income
For IRAS to assess a company's chargeable income, they'll need to go over the Estimated Chargeable Income (ECI) Statement. The statement will include the company's income but will not cover certain items, such as gains on disposal of plant, property, or equipment. Simply put, if a company is an investment holding company, its main source of income is investment income.
Your company's income will also be reflected in Form C of your tax return. Companies will be asked to indicate the income on the ECI form so the Singapore government can better track business revenue data. Revenue data is one of the most important factors that policymakers rely on for economic data, and it also gives policymakers a general insight into current business development and performance. So rather than having companies fill out survey reporting documents, IRAS found it more efficient to go through ECI forms to collect economic data.
What’s Chargeable Income?
If ECI is an estimate of your company’s projected income, you still need to declare your company’s taxable income, or what’s referred to as Chargeable Income (CI). And unlike ECI, companies need to file Forms C/C-S even if the company is losing money.
Submission of chargeable income is more complicated than ECI as this requires a detailed tax computation and information on your company’s tax adjustments and deductions.
Depending on certain criteria, you’ll need to submit either Forms C, C-S, or C-S Lite. Form C-S Lite is for companies with revenues under S$200,000.
What If There’s a Difference in Amount Between CI Reported in Form C/C-S and ECI?
If the chargeable income reported in either Forms C/C-S is less than the ECI, then the excess tax paid earlier will be refunded automatically.
However, if the CI reported is more than the ECI, the additional tax must be paid within one month from the Notice of Assessment Date.
When Do You File Form C/C-S?
Both Forms C and C-S are submitted near the end of the year. E-filing deadline is 30th of November of every year.
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When Do Singapore Registered Companies Submit their ECI?
Companies need to submit their ECI to IRAS within 90 days after the end of their financial year.
Which Companies Do Not Need To Apply For ECI?
As of 2013, companies whose financial year ended in October 2012 or later are not required to apply for an ECI in Singapore as long as they meet certain conditions under the Administrative Concession Scheme:
If a company has an annual revenue of less than S$ 1 million for the financial year, and;
ECI* is NIL
* ECI refers to the amount before deductions for amount exempt under partial tax exemption scheme, or tax exemption schemes for newer companies.
Your company is required to self-assess if it qualifies for the ECI filing waiver. If your company is new, learn when to file its first ECI.
Your company’s ECI filing status for the YA at mytax.iras.gov.sg may show 'Ready to File'. Nonetheless, if you qualify for the ECI filing waiver, you are not required to file. There is no need to seek confirmation from or inform IRAS of the waiver.
You still need to apply for an ECI even if your company has a "NIL" ECI for the current valuation year. This means your company is not earning profits or the company is dormant.
However, you don't need to comply with ECI if your company is:
A foreign university-designated unit trust or an approved CPF Unit Trust
An owner or a charterer of a foreign vessel whose shipping return is submitted by the shipping agent
A Real Estate Investment Trust (REIT) and provides special tax treatment under section 43(2) of the Income Tax Act
Granted waivers from submitting ECIs by IRAS
What Are The Benefits of Estimated Chargeable Income?
ECI, like other taxes, offers several benefits. While most SMEs will be eligible for the ECI waiver, they can enjoy the benefits of ECI when it becomes mandatory for them to file for it.
Tax Refund
Filing ECI will allow a company to qualify for a Corporate Income Tax (CIT) Rebate. To motivate more companies to file their ECIs, this tax rebate can go as high as 20%, depending on the total taxable income.
But to make this fair for everyone, regardless of a company's size or yearly income, the tax refund is capped at S$10,000. It might not be that much for larger companies, but that's already more than what smaller and medium-sized companies could ask for.
Flexible Payment Options
IRAS provides a reward system for companies who file their ECIs early. When a company submits their ECI or financial statement on time, IRAS can offer flexible payment options in instalments. There are also benefits to sending electronic files as opposed to paper files.
As a mandatory obligation for companies in Singapore (unless officially exempted), the IRAS has a reward system to encourage early filings. In other words, when a company submits its financial statement on time, IRAS offers the company flexible payment options in instalments. It also benefits when electronic files are sent instead of paper files.
Because companies are required to submit within the first three months after their assessment year, companies that file for their ECI within the first month are offered ten installment payments for electronic files, and five for paper files.
Companies who file on their second month are eligible for eight instalment payments for electronic files and four for paper files. If a company files on the third month, six months instalment is provided for those who file electronically, and three months installment for paper filing.
When Do Companies Apply For Estimated Chargeable Income (ECI)?
Companies must file for their ECI within three months after the year of assessment (YA), with no exceptions. You might be able to get an extension, but you should always make it a point to file your ECI within three months of your financial year's ending.
What Kind of Information Is Needed?
Visit the MyTax Page from IRAS and make sure that:
You are authorized by your company as "APPROVER" for Corporate Tax (Filings and Applications) in Corppass.
You have your SingPass ready and your company's UEN/Entity ID
You have your Company's Tax Reference Number
If everything's good, you should be able to file for your ECI through the website.
You can refer to these guides for filing:
Declaration of Revenue for Filing ECI
You will need to declare your company revenue when you file ECI. By definition, revenue is your company's main source of income and excludes other items such as the disposal of fixed assets.
Frequently Asked Questions About Estimated Chargeable Income
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At Piloto Asia, we specialize in providing reliable accounting services in Singapore to assist with your ECI (Estimated Chargeable Income) filing.
Our experienced team is well-versed with the specific accounting and tax regulations pertaining to ECI filings. We offer tailored solutions to ensure accurate and timely submissions, helping you comply with the regulatory requirements while optimizing your tax position.
Reach out to us to learn how our accounting services can support your business in managing its ECI filing and other accounting needs efficiently and effectively.
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A company that fails to file their ECI within three months is issued a Notice of Assessment based on an estimated company income. You can read more about the estimated Notice of Assessment here.
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IRAS may still raise estimated assessments on companies that don't qualify for an ECI filing waiver based on their available info on a company.
If a company gets issued a Notice of Assessment but is qualified to get an ECI Waiver, they send an email through myTax Email before the payment due date is confirmed. This email will inform IRAS that the company's annual revenue is under $5 million, and the ECI is NIL for the current Year of Assessment (YA). IRAS will make these immediate amendments and will not enforce anything for non-payment.
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Yes, IRAS sends out notifications to companies to file their ECIs before the end of their financial year. If your company is eligible for the ECI Filing Waiver, you may not proceed with the filing.
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Yes, companies still need to proceed with the filing even if the financial year-end data is incorrect. You will need to update your financial year end with Accounting and Corporate Regulatory Authority (ACRA) through BizFile+.
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You will only be able to enter the ECI amount for your company at myTax, but you won't be able to file the IRAS. Only an Approver can file the ECI with IRAS. You need to be authorized as Approver by your company.
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Yes, tax agents are able to file ECI for a maximum of four clients per submission. Filing more than four clients at a time can result in slower processing.
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No. You will receive a consolidated acknowledgement statement for all the clients that you file for in a single submission. The Notices of Assessment will be issued directly to your clients.
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In addition to ECI filing, companies in Singapore have several other financial responsibilities, including annual returns, financial statement preparations, and tax computations.
Navigating these requirements can be complex, and it's beneficial to have expert guidance.
By partnering with a reputable accounting and auditing firm in Singapore, you can ensure that all financial obligations are met accurately and on time.
Such firms can provide comprehensive services, from audit assurance to financial advisory, ensuring your company remains compliant and financially sound.
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ECI stands for 'Estimated Chargeable Income' in Singapore. It involves reporting the income that is taxable after deducting the tax-allowable expenses for the year of assessment (YA). This must be declared to the Inland Revenue Authority of Singapore (IRAS) within three months of your company's financial year end. If a company in Singapore is an 'intermediate holding company', intermediate holding company meaning it holds the shares of other companies but is itself owned by another enterprise, it would also need to declare and submit its ECI to IRAS. This is in line with the governance and tax reporting requirements in Singapore for such entities. However, some companies may be exempted from submitting an ECI under specific conditions.
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The ECI is a provisional tax payment companies in Singapore must make yearly. It is based on the company's estimated chargeable income for the year. The ECI ensures that companies pay the correct corporate tax amount by the year's end. The corporate tax rate in Singapore is 17%. However, several deductions and exemptions can reduce the effective tax rate.
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ECI, or 'Estimated Chargeable Income', is a crucial financial declaration in Singapore. It represents a company's estimated taxable income after deducting allowable expenses for a specific Year of Assessment (YA). Companies, including intermediate holding companies – meaning those that hold shares of other companies but are themselves owned by another enterprise – must declare and submit their ECI to the Inland Revenue Authority of Singapore (IRAS) within three months of their financial year end. While some companies may be exempt from submitting ECI under certain conditions, understanding and complying with these requirements is essential for all business entities, including intermediate holding companies, to ensure proper tax reporting and compliance in Singapore.
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The Notice of Assessment (NOA) in Singapore, issued by the Inland Revenue Authority of Singapore (IRAS), is an official statement that details taxpayers' tax liabilities or confirms their tax assessments for a given tax year.
The NOA generally includes the following information:
Taxpayer's details: Such as name, identification number, and address.
Year of assessment: Referring to the tax year for which the assessment is made.
Assessment income: The amount of income that is subjected to tax.
Chargeable Income: Income subject to tax after exemptions and reliefs.
Tax rate: The rate at which the income is taxed.
Total tax payable: The amount of tax the taxpayer is required to pay.
Due date: The deadline by which the taxpayer must pay any outstanding balance.
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In Singapore, The Financial Reporting Standard for Small Entities in Singapore is designed to meet the financial reporting needs of small, owner-managed businesses. Eligible entities—those not publicly accountable and meeting two of the following: under S$10 million in annual revenue or gross assets, and/or no more than 50 employees—can opt for this standard over the full FRS. At Piloto Asia, as Singapore's #1 corporate service provider, we guarantee our expertise in guiding small businesses with their compliance to this important reporting standard.
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At Piloto Asia, our seasoned team of experts can assist you in navigating through the complex corporate tax requirements in Singapore, including Estimated Chargeable Income (ECI) submissions. We provide top-notch accounting and bookkeeping services in Singapore tailored to your unique business needs. From preparing financial statements and converting them into XBRL format, to detailed tax computation, filing, and corporate secretarial services, we've got you covered. Partner with us to ensure your business not only stays compliant with IRAS regulations but also thrives, allowing you to focus on what you do best—growing your business.
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Yes, it's a good idea to hire an accounting company for your company's Estimated Chargeable Income (ECI) submission to IRAS in Singapore. While it's not required, having a professional accounting firm like Piloto Asia on your side means your financial statements and ECI calculations will be spot on. This can help with better tax planning. A reliable accounting firm will also make sure you follow all of IRAS's rules, avoid any fines, and might even find ways to optimize tax obligations.
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Yes, indeed. As Singapore's premier corporate service provider, Piloto Asia offers comprehensive and efficient corporate tax services in Singapore.
Our services include tax planning, advisory, computation of estimated chargeable income (ECI), and submission of tax returns. With our deep expertise and experience, we are here to help you navigate through Singapore's tax system with great ease and confidence.
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At Piloto Asia, we understand that starting a business comes with various costs. How much to start a business in Singapore largely varies depending on the type, size, and industry of the business. It can range from a few hundred to thousands of dollars. This cost includes:
Company Registration: Fees for incorporating your business.
Business Licenses: Costs associated with obtaining necessary permits and licenses.
Rent: Expenses for leasing office or commercial space.
Initial Staff Salaries: Payment for employees' wages.
It's also important to factor in ongoing costs such as taxes and compliance fees. For a more detailed breakdown of costs and personalized advice, get in touch with our expert team today!